The serious decline in housing sales in many parts of the country is well documented. This downturn was preceded by several years of rising home prices in many areas. In some cases, prices rose beyond levels that were supported by local salaries, and were clearly not sustainable. The driving force that fueled the rise in home prices was the availability of low interest money. Easy availability of home mortgage money, plus historically low interest rates, allowed the demand side of the market to build.
When buyers could expect 15% - 30% appreciation and get 6% interest rates, who would not be motivated to buy? It was a no-brainer! Of course, high demand leads to higher prices. And, high demand leads to more new homes, as builders respond to the demand.
The flow of money for mortgages came from new and unregulated sources. In the not too distant past, government regulated entities, such as Fannie Mae, were the main buyers of mortgages from lenders. More recently, Wall Street investors entered the market for buying real estate loans. Alternative loans, interest-only loans, 100% loans, creative ARM's, no-documentation, and other high risk products became commonplace. Some of these loans began with a low interest rate that the borrower barely qualified for, and then switched to a higher rate after a short time. In many cases, the borrowers did not understand the risk that they were taking.
For most of my experience in real estate, buyers usually put 5% - 20% down, with 28% of their income allowed for mortgage payment, and their income was fully documented. When we began to see 100% financing on contracts, we were a little concerned by the shortage of personal investment, or skin in the game, as they say. The underlying expectation was that the market value of the home would increase quickly, and the buyers would be covered, if they needed to sell. Home ownership became speculative.
Sub-prime, alternative, no-doc, and other high risk loans are not limited to low income or poor credit buyers, and are not always predatory. Often, very sophisticated borrowers chose to keep their cash and leverage the purchase. In all price ranges, the easy availability of low interest money fueled the demand for home ownership, as well as investment in rental property. Inevitably, the demand for homes led to price increases, and elevated inventories, as builders produced more homes. Then the cycle was broken.
What caused the break? Foreclosures. Investors soon realized that mortgage backed securities contained more risk than expected, and stopped buying them. Suddenly, lenders did not have this new market for selling many of their loans. Without the flow of funds for easy mortgages, demand for homes slowed down. Prices began to fall in many parts of the country, and oversupply conditions prevailed. This has created challenging conditions for many homebuilders.
Of course, real estate markets are local, and some localities will fare better than others. Job growth, continued low interest rates, and reduced supply from builders are key factors that contribute to more balanced local real estate markets. But, in nearly all areas, the effects of the new tighter requirements for home mortgages will slow the market.
For the next year, sellers will have to consider the fundamentals to attract a buyer. They will need competitive pricing, excellent presentation, and top level marketing. Buyers will have to have a down payment, good credit, and proper income for their loan.
So, for the next few years, it's back to the future for real estate.
In a world where men and women often spend more time with their BlackBerrys and iPhones than they do with other each other, the longing for shared experiences and face-to-face interaction has become palpable. According to Mary Vallone, President of Highlife Adventures (www.highlifeadventures.com), an upscale social club for singles in Chicago and Indianapolis, this is especially true when it comes to dating. ?Men and women are stepping out from the anonymity of the online dating world and reclaiming their lives,? Vallone says. ?Today's singles not only want to meet people who share their interests, but they also want to share real-life experiences with like-minded potential mates.?
For many singles, this trend toward group activities based on common interests breaks new ground in the dating arena. ?In a sense, we're going back to the future,? says Vallone. ?It's as though the ice cream social of the early 20th century has been kicked up several notches.?
Indeed, Highlife Adventures? 3,000 Chicagoland members would be hard-pressed to find an ice cream social among the over 65 activities planned each month. Those who crave adventure can go parasailing, caving, or experience being a fighter pilot for a day. Music aficionados can revel in a hot night of cool jazz or attend a rock star fantasy camp, while those with cultural interests can attend a performance of the Chicago Symphony or a Frank Lloyd Wright tour. Members who enjoy the club scene can participate in a trolley pub-crawl, a moonlight party cruise, or events like ?Martinis and Manicures? or ?Pots ?n? Shots Pottery Class.?
Vallone explains that Highlife Adventures? approach serves to bring people together in a pressure-free setting. ?When you attend an event, you're meeting people you already have something in common with and who are all there to meet you,? she says. ?And, when you're having fun, you let your guard down and are more likely to meet the right person.?
This new dating trend is in stark contrast to the bar scene of the 1980s, the one-on-one matching services of the 1990s, and the speed dating phenomena that peaked a few years ago. ?Not all singles like to hang out in bars, many don't care for the pressure of sequential one-on-one dates, and most people find that speed dating is too superficial,? says Vallone. And, while online dating may appeal to the college crowd, many of the 25- to 45-year-olds in Highlife Adventures? membership have ?been there, done that.? According to Vallone, ?Meeting people online can be fun, but also fraught with pitfalls. Singles fare better when they put down the mouse, get out of the house, and meet people face-to-face.?
Highlife Adventures helps ensure their members? experiences are positive by prescreening potential members in person and having a company representative at each event. Ultimately, Vallone concludes, ?We don't match anyone. Instead, we provide unique, fun events where groups of singles can meet one another and find what they seek ? whether it's a friend, a date, or a soulmate.?
Both Roselind Hejl & Robert Thomson are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Roselind Hejl has sinced written about articles on various topics from Real Estate, Home Improvement and Buying and Selling Home. Roselind Hejl is a Realtor with Coldwell Banker United in Austin, Texas. Her website - http://www.weloveaustin.com - offers homes for sale, market trends, buyer and sel. Roselind Hejl's top article generates over 22200 views. Bookmark Roselind Hejl to your Favourites.
Robert Thomson has sinced written about articles on various topics from Personal Desktop, Finances and Pets. Highlife Adventures is a social club for Chicago Singles, with a second branch in Indianapolis.. Robert Thomson's top article generates over 450000 views. Bookmark Robert Thomson to your Favourites.